Integrating knowledge and innovation through ambidextrous leadership: dual pathways to business circularity

This study explores how ambidextrous leadership integrates organizational knowledge and innovation to promote business circularity, focusing on the parallel mediating mechanisms of circular exploitative and circular explorative activities. Specifically, drawing on the resource-based view and the dynamic capabilities framework, it investigates how leadership mobilizes existing knowledge for operational efficiency (exploitation) and generates new knowledge for long-term innovation (exploration) to support circular economy (CE) business model adoption. Data were collected in two waves from 292 owners and managers of marble manufacturing firms. Using SmartPLS v4.1.1.5, the measurement and structural models were estimated utilizing CB-SEM and bootstrapped parallel mediation. Necessary condition analysis (NCA) was further performed to explore the sufficiency and necessity of the parallelism of the two mediating mechanisms. The results indicate that ambidextrous leadership significantly affects business circularity, with circular exploitation and circular exploration fully and significantly mediating this effect. Meanwhile, circular exploration emerges as the stronger pathway. NCA demonstrates that both activities are necessary conditions for achieving higher business circularity. The findings extend circular ambidexterity theory and reinforce the complementary nature of exploitative and explorative practices in sustainability transitions. Practically, the study highlights that leaders in resource-intensive industries need to cultivate both process-driven efficiency and innovation-led transformation to support the transition toward CE business models.